North Carolina Tax Changes - October 2024
Week Of 10.14.2024
North Carolina Enacts Waiver of Interest on Underpayments, Extension to File Partnership and S Corporation Entity Level Tax Election Due to Hurricane Helene
Week Of 10.07.2024
The North Carolina Department of Revenue is offering tax relief to individuals and businesses affected by Hurricane Helene.
This relief applies to the entire state of North Carolina.
Here's what the tax relief covers:
- Late Action Penalties: The Department will waive any late action penalties assessed for licenses, returns, or payments due between September 25, 2024, and May 1, 2025, as long as the license is obtained, the return is filed, or the tax is paid by May 1, 2025.
Who qualifies for tax relief:
- Individuals: Living in North Carolina.
- Businesses: With a principal place of business in North Carolina (including tax-exempt organizations).
- Individuals and Businesses: Whose records necessary to meet a state tax deadline are located in North Carolina.
- Relief Workers: Assisting in North Carolina and affiliated with a recognized government or philanthropic organization.
- Individuals: Visiting North Carolina who were killed or injured as a result of the disaster.
What qualifies for penalty relief:
- Failure to obtain a license.
- Failure to file a return.
- Failure to pay tax when due.
- Failure to file an informational return.
How to request tax relief:
- Form NC-5500 (Request to Waive Penalties): Complete the "natural disaster" section and write "Hurricane Helene" at the top.
- Form NC-5501 (Request for Waiver of an Informational Return Penalty): Place an "X" in the "other" block on Part 4 and write "Hurricane Helene" as the circumstance that prevented timely filing.
- Call the Department: 1-877-252-3052.
Note: Taxpayers who previously received tax relief through February 3, 2025, due to Tropical Storm Debby now qualify for tax relief through May 1, 2025.
Week Of 10.14.2024
North Carolina Enacts Waiver of Interest on Underpayments, Extension to File Partnership and S Corporation Entity Level Tax Election Due to Hurricane Helene
On October 10, 2024, North Carolina Governor Roy Cooper signed the Disaster Recovery Act of 2024, which provides tax relief to certain taxpayers located in the counties affected by Hurricane Helene who would otherwise be required to file returns and make tax payments in the immediate wake of the recovery period. The legislation waives the accrual of interest for the underpayment of the following taxes: corporate income tax; personal income tax; franchise tax; sales and use tax; and withholding tax. Relief is available in the following counties: any county declared a major disaster by the President of the United States under the Stafford Act as a result of Hurricane Helene; and Nash County. Also, additional time is provided for partnerships and S corporations to file for an election to be taxed at the entity level. Further, the North Carolina Department of Revenue has issued an important notice clarifying the legislation. (L. 2024, H149 (c. 51), effective 10/10/2024; Important Notice: Tax Relief Granted in the Disaster Recovery Act of 2024, N.C. Dept. of Rev., 10/11/2024.)
Corporate income, personal income, and franchise tax interest waiver. The North Carolina Secretary of Revenue cannot charge interest from September 25, 2024, through May 1, 2025, on an underpayment of tax imposed on a corporate income, personal income tax, or franchise tax return, including a partnership and estate and trust tax return, due on September 25, 2024, through May 1, 2025, for a taxpayer that resides or is located in an aforementioned county.
Estimated taxes: The relief from the accrual of interest also includes interest imposed for underpayment of estimated corporate and personal income tax.
Sales and use tax interest waiver. The Secretary of Revenue must waive the accrual of interest for an underpayment of state, local, or transit sales and use taxes by a taxpayer whose principal place of business is located in an aforementioned county as follows: (1) for an underpayment of tax due on a quarterly return for the third calendar quarter of 2024, the amount of interest accrued from October 31, 2024, through November 30, 2024, so long as the payment is made on or before November 30, 2024; (2) for an underpayment of tax due on a monthly return for September 2024, the amount of interest accrued from October 20, 2024, through November 20, 2024, so long as the payment is made on or before November 20, 2024; or (3) for an underpayment of tax due on a monthly return for October 2024, the amount of interest accrued from November 20, 2024, through December 20, 2024, so long as the payment is made on or before December 20, 2024.
Withholding tax interest waiver. The Secretary of Revenue must waive the accrual of interest for an underpayment of withheld taxes by a taxpayer located in an aforementioned county as follows: (1) for an underpayment of tax due on a quarterly return for the third calendar quarter of 2024, the amount of interest accrued from October 31, 2024, through November 30, 2024, so long as the payment is made on or before November 30, 2024; (2) for an underpayment of tax due on a monthly return for September 2024, the amount of interest accrued from October 15, 2024, through November 15, 2024 so long as the payment is made on or before November 15, 2024; or (3) for an underpayment of tax due on a monthly return for October 2024, the amount of interest accrued from November 15, 2024, through December 15, 2024, so long as the payment is made on or before December 15, 2024.
Taxed partnership and S corporation election. The election for partnerships or S corporations for tax year 2023 to be taxed at the entity level will be considered timely on an annual return due after September 25, 2024, and before May 1, 2025, if the election is made on a return filed on or before May 1, 2025. The Department of Revenue noted that the additional time applies to all eligible partnerships and S corporations, regardless of whether the pass-through entity is in a disaster county.
Counties eligible for disaster relief. The Department of Revenue has listed the following 28 counties that are eligible for disaster relief: Alexander; Alleghany; Ashe; Avery; Buncombe; Burke; Caldwell; Catawba; Clay; Cleveland; Gaston; Haywood; Henderson; Jackson; Lincoln; Macon; Madison; McDowell; Mecklenburg; Mitchell; Nash; Polk; Rutherford; Swain; Transylvania; Watauga; Wilkes; and Yancey.
Requesting relief. Underpayment of estimated tax: For eligible taxpayers who did not pay the required amount of estimated income tax for tax year 2024 and owe interest on the underpayment, the Department of Revenue advises such taxpayers to enter “E” in the “Exception to Underpayment of Estimated Tax” box on the applicable 2024 tax form.
Other interest: For eligible taxpayers who were assessed interest subject to waiver, the Department of Revenue advises such taxpayers to notify the Department of Revenue by taking one of the following actions: submit Form NC-5502 (Special Penalty and Interest Waiver), and write “Hurricane Helene” in the space provided to explain why interest should be waived; or call the Department of Revenue at 1-877-252-3052.
Week Of 10.07.2024
North Carolina Provides Tax Relief for Victims of Hurricane Helene
The North Carolina Department of Revenue has announced that it will offer tax relief to affected individual and business taxpayers in the entire state of North Carolina who were affected by Hurricane Helene. The Department will remove any late action penalties assessed against affected taxpayers for licenses, returns, or payments due on September 25, 2024 through May 1, 2025, if the license is obtained, the return is filed, or the tax is paid by May 1, 2025. (Important Notice: Tax Relief for Victims of Hurricane Helene, N.C. Dept. of Rev., 10/03/2024.)
Affected taxpayers. North Carolina tax relief applies to all taxpayers identified as affected taxpayers by the IRS. Affected taxpayers include: (1) individuals who live in North Carolina; (2) businesses (including tax-exempt organizations) whose principal place of business is located in North Carolina; (3) other individuals and businesses whose records are necessary to meet a state tax deadline are located in North Carolina; (4) relief workers assisting in North Carolina and who are affiliated with a recognized government or philanthropic organization; or (5) any individual visiting North Carolina who was killed or injured as a result of the disaster.
North Carolina tax relief. The late action penalties that qualify for relief are as follows: (1) failure to obtain a license; (2) failure to file a return; (3) failure to pay tax when due; or (4) failure to file an informational return. The Department noted that affected taxpayers who previously received North Carolina tax relief through February 3, 2025 due to Tropical Storm Debby now qualify for North Carolina tax relief through May 1, 2025.
Requesting state tax relief. Affected taxpayers who are erroneously assessed a late action penalty or non-affected taxpayers who cannot meet their filing or payment requirements as a result of Hurricane Helene are advised to submit Form NC-5500 (Request to Waive Penalties) or Form NC-5501 (Request for Waiver of an Informational Return Penalty) and write “Hurricane Helene” at the top of the form; or call the Department at 1-877-252-3052. Affected taxpayers who submit Form NC-5500 should complete the “natural disaster” section of the form. Taxpayers who file Form NC-5501 should place an “X” in the block beside “other” located on Part 4 of the form and write “Hurricane Helene” as the circumstance that prevented the timely filing of the informational return.
Week Of 10.14.2024
North Carolina Enacts Waiver of Interest on Underpayments, Extension to File Partnership and S Corporation Entity Level Tax Election Due to Hurricane Helene
On October 10, 2024, North Carolina Governor Roy Cooper signed the Disaster Recovery Act of 2024, which provides tax relief to certain taxpayers located in the counties affected by Hurricane Helene who would otherwise be required to file returns and make tax payments in the immediate wake of the recovery period. The legislation waives the accrual of interest for the underpayment of the following taxes: corporate income tax; personal income tax; franchise tax; sales and use tax; and withholding tax. Relief is available in the following counties: any county declared a major disaster by the President of the United States under the Stafford Act as a result of Hurricane Helene; and Nash County. Also, additional time is provided for partnerships and S corporations to file for an election to be taxed at the entity level. Further, the North Carolina Department of Revenue has issued an important notice clarifying the legislation. (L. 2024, H149 (c. 51), effective 10/10/2024; Important Notice: Tax Relief Granted in the Disaster Recovery Act of 2024, N.C. Dept. of Rev., 10/11/2024.)
Corporate income, personal income, and franchise tax interest waiver. The North Carolina Secretary of Revenue cannot charge interest from September 25, 2024, through May 1, 2025, on an underpayment of tax imposed on a corporate income, personal income tax, or franchise tax return, including a partnership and estate and trust tax return, due on September 25, 2024, through May 1, 2025, for a taxpayer that resides or is located in an aforementioned county.
Estimated taxes: The relief from the accrual of interest also includes interest imposed for underpayment of estimated corporate and personal income tax.
Sales and use tax interest waiver. The Secretary of Revenue must waive the accrual of interest for an underpayment of state, local, or transit sales and use taxes by a taxpayer whose principal place of business is located in an aforementioned county as follows: (1) for an underpayment of tax due on a quarterly return for the third calendar quarter of 2024, the amount of interest accrued from October 31, 2024, through November 30, 2024, so long as the payment is made on or before November 30, 2024; (2) for an underpayment of tax due on a monthly return for September 2024, the amount of interest accrued from October 20, 2024, through November 20, 2024, so long as the payment is made on or before November 20, 2024; or (3) for an underpayment of tax due on a monthly return for October 2024, the amount of interest accrued from November 20, 2024, through December 20, 2024, so long as the payment is made on or before December 20, 2024.
Withholding tax interest waiver. The Secretary of Revenue must waive the accrual of interest for an underpayment of withheld taxes by a taxpayer located in an aforementioned county as follows: (1) for an underpayment of tax due on a quarterly return for the third calendar quarter of 2024, the amount of interest accrued from October 31, 2024, through November 30, 2024, so long as the payment is made on or before November 30, 2024; (2) for an underpayment of tax due on a monthly return for September 2024, the amount of interest accrued from October 15, 2024, through November 15, 2024 so long as the payment is made on or before November 15, 2024; or (3) for an underpayment of tax due on a monthly return for October 2024, the amount of interest accrued from November 15, 2024, through December 15, 2024, so long as the payment is made on or before December 15, 2024.
Taxed partnership and S corporation election. The election for partnerships or S corporations for tax year 2023 to be taxed at the entity level will be considered timely on an annual return due after September 25, 2024, and before May 1, 2025, if the election is made on a return filed on or before May 1, 2025. The Department of Revenue noted that the additional time applies to all eligible partnerships and S corporations, regardless of whether the pass-through entity is in a disaster county.
Counties eligible for disaster relief. The Department of Revenue has listed the following 28 counties that are eligible for disaster relief: Alexander; Alleghany; Ashe; Avery; Buncombe; Burke; Caldwell; Catawba; Clay; Cleveland; Gaston; Haywood; Henderson; Jackson; Lincoln; Macon; Madison; McDowell; Mecklenburg; Mitchell; Nash; Polk; Rutherford; Swain; Transylvania; Watauga; Wilkes; and Yancey.
Requesting relief. Underpayment of estimated tax: For eligible taxpayers who did not pay the required amount of estimated income tax for tax year 2024 and owe interest on the underpayment, the Department of Revenue advises such taxpayers to enter “E” in the “Exception to Underpayment of Estimated Tax” box on the applicable 2024 tax form.
Other interest: For eligible taxpayers who were assessed interest subject to waiver, the Department of Revenue advises such taxpayers to notify the Department of Revenue by taking one of the following actions: submit Form NC-5502 (Special Penalty and Interest Waiver), and write “Hurricane Helene” in the space provided to explain why interest should be waived; or call the Department of Revenue at 1-877-252-3052.
Week Of 10.07.2024
North Carolina Provides Tax Relief for Victims of Hurricane Helene
The North Carolina Department of Revenue has announced that it will offer tax relief to affected individual and business taxpayers in the entire state of North Carolina who were affected by Hurricane Helene. The Department will remove any late action penalties assessed against affected taxpayers for licenses, returns, or payments due on September 25, 2024 through May 1, 2025, if the license is obtained, the return is filed, or the tax is paid by May 1, 2025. (Important Notice: Tax Relief for Victims of Hurricane Helene, N.C. Dept. of Rev., 10/03/2024.)
Affected taxpayers. North Carolina tax relief applies to all taxpayers identified as affected taxpayers by the IRS. Affected taxpayers include: (1) individuals who live in North Carolina; (2) businesses (including tax-exempt organizations) whose principal place of business is located in North Carolina; (3) other individuals and businesses whose records are necessary to meet a state tax deadline are located in North Carolina; (4) relief workers assisting in North Carolina and who are affiliated with a recognized government or philanthropic organization; or (5) any individual visiting North Carolina who was killed or injured as a result of the disaster.
North Carolina tax relief. The late action penalties that qualify for relief are as follows: (1) failure to obtain a license; (2) failure to file a return; (3) failure to pay tax when due; or (4) failure to file an informational return. The Department noted that affected taxpayers who previously received North Carolina tax relief through February 3, 2025 due to Tropical Storm Debby now qualify for North Carolina tax relief through May 1, 2025.
Requesting state tax relief. Affected taxpayers who are erroneously assessed a late action penalty or non-affected taxpayers who cannot meet their filing or payment requirements as a result of Hurricane Helene are advised to submit Form NC-5500 (Request to Waive Penalties) or Form NC-5501 (Request for Waiver of an Informational Return Penalty) and write “Hurricane Helene” at the top of the form; or call the Department at 1-877-252-3052. Affected taxpayers who submit Form NC-5500 should complete the “natural disaster” section of the form. Taxpayers who file Form NC-5501 should place an “X” in the block beside “other” located on Part 4 of the form and write “Hurricane Helene” as the circumstance that prevented the timely filing of the informational return.